Dan Niles, chief investment officer of hedge fund AlphaOne Capital Partners:
“Apple is an extremely innovative hardware company that has about 800 million iTunes credit cards. Investors want to see them put a recurring revenue stream on top of that through a service offering. To see this kind of money spent for a company that gets most of its revenue from hardware business is not what we want to see.”

Josh Stewart, portfolio manager of the Wasatch World Innovators Fund:
“The headphones are a nice little tuck-in product for Apple and Beats is clearly the top brand in the space. But the niche is pretty tiny when all is said and done and doesn’t move the needle for a behemoth like Apple. Streaming music is a way more interesting space to dominate compared to big ass headphones but buying Beats isn’t going to get Apple there.”

Benedict Evans, partner at venture capital firm Andreessen Horowitz:
“[Jimmy] Iovine joining Apple can’t hurt. But this won’t make the difference between unbundling HBO from a typical pay TV package and not being able to do it. People in Hollywood do not give deals to people because they like them and know them. Yes relationships are important, but you do deals with an economic model and a checkbook. This is what we will pay you and this is how it will fit into your current business model.”

Sameet Sinha, analyst at B. Riley & Co.:
“It’s tough for me to figure out what Apple gets out of this. One thing is clear, they bought this for music and that tells us how difficult it is to scale a streaming music business. Google is having trouble, Microsoft killed Zune. But music is such a great consumer engagement tool that it is difficult to ignore.”

Patrick Becker Jr., portfolio manager at Becker Capital Management, which oversees $3.1 billion in assets and owns Apple shares:
“It’s a head scratcher. However, Apple has earned the right to be given time to show why this deal makes sense. We never like to see a company buy something for $3 billion when a few months ago it was worth about $1 billion [based on the valuation when private investors bought a piece of the company in September]. We wonder whether this is an appropriate use of shareholder cash. We may worry if this becomes a trend. A lot of us own the stock because of the high cash balances and we expect the return of that capital. When you see an acquisition like this you want to understand how we get paid for a deal like this.”

Gene Munster, analyst at Piper Jaffray:
“The two core motivations for the acquisition were to bring Jimmy Iovine and Dr. Dre on board with Apple (as previously expected) and to integrate the Beats Music streaming service into iOS. If successful, adding Iovine and Dr. Dre could help propel Apple into the next level in its content offering, particularly in video, which could pave the way for new products including a television.”